Malawi credits IMF loans for healthier economy

LILONGWE (Reuters) - Malawian Finance Minister Goodall Gondwe on Wednesday credited the International Monetary Fund for bolstering the African nation's foreign reserves and allowing it to reduce domestic debt and interest rates.

Malawi, one of the poorest nations in Africa, is enjoying a modest economic boom that has been sparked by good maize harvests, economic reforms and an increase in aid from Western nations and other international donors.

The IMF has provided the southern African nation $62.1 million in loans under a three-year programme agreed in 2005. The IMF's final payment this week was increased to $24.7 million because of its concerns over Malawi's foreign reserves position.

In a press conference in Lilongwe, Gondwe said the IMF funding enabled the government to absorb the shock of rising fuel and fertiliser costs and help lay the foundation for economic stability.

"It is largely because of the IMF programme and our success in following that programme that we have managed macroeconomic achievement like the deceleration of domestic debt from 25 percent of GDP in 2004 to about 12 percent now," Gondwe said.

"Because of the IMF programme the interest rates have decelerated from 35 percent to 15 percent, inflation from as high as 30 percent to single digits of 7.9 percent."

The country's inflation rate dropped into single digits in early 2007 for the first time in four years, fuelled by lower food prices. That prompted the central bank to continue cutting interest rates.

The government has said it expects the economy to grow by about 7 percent in 2008.